Nội dung

www.downloadslide.net International Accounting Fourth Edition Timothy Doupnik University of South Carolina Hector Perera Macquarie University INTERNATIONAL ACCOUNTING, FOURTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2015 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2012, 2010, and 2005. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 QVS/QVS 1 0 9 8 7 6 5 4 ISBN 978-0-07-786220-6 MHID 0-07-786220-1 Senior Vice President, Products & Markets: Kurt L. Strand Vice President, General Manager, Products & Markets: Michael Ryan Vice President, Content Production & Technology Services: Kimberly Meriwether David Managing Director: Tim Vertovec Brand Manager: James Heine Director of Development: Ann Torbert Development Editor: Gail Korosa Marketing Manager: Kathleen Klehr Content Production: Terri Schiesl Content Production Manager: Faye Schilling Content Project Manager: Judi David Buyer: Susan K. Culbertson Cover Designer: Studio Montage, St. Louis, MO. Cover Image: Brand X Pictures Compositor: MPS Limited Typeface: 10/12 Palatino Printer: Quad/Graphics All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Doupnik, Timothy S. International accounting / Timothy Doupnik, University of South Carolina, Hector Perera, Macquarie University.—Fourth Edition. pages cm Includes bibliographical references and index. ISBN 978-0-07-786220-6 (alk. paper) 1. Accounting. 2. International business enterprises—Accounting. 3. Foreign exchange— Accounting. I. Perera, M. H. B. II. Title. HF5636.D68 2014 657'.96—dc23 2013039346 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites. www.mhhe.com To my wife, Birgit, and children, Stephanie and Alexander —TSD To my wife, Sujatha, and daughter, Hasanka —HBP About the Authors Timothy S. Doupnik University of South Carolina Timothy S. Doupnik is a Professor of Accounting at the University of South Carolina, where he has been on the faculty since 1982, and primarily teaches financial and international accounting. He served as director of the School of Accounting from 2003 until 2010, and then as Vice Provost for international affairs until 2013. He has an undergraduate degree from California State University–Fullerton, and received his master’s and Ph.D. from the University of Illinois. Professor Doupnik has published exclusively in the area of international accounting in various journals, including The Accounting Review; Accounting, Organizations, and Society; Abacus; Journal of International Accounting Research; Journal of Accounting Literature; International Journal of Accounting; and Journal of International Business Studies. Professor Doupnik is a past president of the International Accounting Section of the American Accounting Association, and he received the section’s Outstanding International Accounting Educator Award in 2008. He has taught or conducted research in the area of international accounting at universities in a number of countries around the world, including Brazil, China, Dominican Republic, Finland, Germany, and Mexico. Hector B. Perera Macquarie University Hector Perera is an Emeritus Professor at Massey University, New Zealand, and an Adjunct Professor at Macquarie University, Australia. Prior to joining Macquarie University in January 2007, he was at Massey University for 20 years. He has an undergraduate degree from the University of Peradeniya, Sri Lanka, and a Ph.D. from the University of Sydney, Australia. Professor Perera’s research has dealt mainly with international accounting issues and has been published in a number of scholarly journals, including Journal of International Accounting Research; Critical Perspectives on Accounting; Journal of Accounting Literature; International Journal of Accounting; Advances in Accounting, incorporating Advances in International Accounting; Journal of International Financial Management and Accounting; Abacus; Accounting and Business Research; Accounting Historians Journal; Accounting, Auditing and Accountability Journal; Journal of Contemporary Asia; British Accounting Review; Accounting Education—An International Journal; Australian Accounting Review; International Journal of Management Education; and Pacific Accounting Review. In an article appearing in a 1999 issue of the International Journal of Accounting, he was ranked fourth equal in authorship of international accounting research in U.S. journals over the period 1980–1996. Professor Perera served as chair of the International Relations Committee of the American Accounting Association’s International Accounting Section in 2003 and 2004. He was an associate editor for the Journal of International Accounting Research and on the editorial boards of Accounting Horizons and Pacific Accounting Review. Currently, he is on the editorial boards of Review of Accounting and Finance; International Journal of Accounting, Auditing and Performance Evaluation; and Qualitative Research in Accounting and Management. Professor Perera has been a visiting professor at a number of universities, including the University of Glasgow in Scotland; New South Wales University, Wollongong University, and Charles Darwin University in Australia; Turku School of Economics and Business Administration and Åbo Akademi University in Finland; Unversiti Teknologi Mara, Malaysia; and University of Sharjah, UAE. iv Preface ORIENTATION AND UNIQUE FEATURES International accounting can be viewed in terms of the accounting issues uniquely confronted by companies involved in international business. It also can be viewed more broadly as the study of how accounting is practiced in each and every country around the world, learning about and comparing the differences in financial reporting, taxation, and other accounting practices that exist across countries. More recently, international accounting has come to be viewed as the study of rules and regulations issued by international organizations—most notably International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). This book is designed to be used in a course that attempts to provide an overview of the broadly defined area of international accounting, but that focuses on the accounting issues related to international business activities and foreign operations and provides substantial coverage of the IASB and IFRS. The unique benefits of this textbook include its up-to-date coverage of relevant material; extensive numerical examples provided in most chapters; two chapters devoted to the application of International Financial Reporting Standards (IFRS); and coverage of nontraditional but important topics such as strategic accounting issues of multinational companies, international corporate governance, and corporate social reporting. This book contains several important distinguishing features: Numerous excerpts from recent annual reports to demonstrate differences in financial reporting practices across countries and to demonstrate financial reporting issues especially relevant for multinational corporations. Incorporation of research findings into the discussion on many issues. Extensive end-of-chapter assignments that help students develop their analytical, communication, and research skills. Detailed discussion on the most recent developments in the area of international harmonization/convergence of financial reporting standards. Two chapters on International Financial Reporting Standards that provide detailed coverage of a wide range of standards and topics. One chapter focuses on the financial reporting of assets, and the second chapter focuses on liabilities, financial instruments, and revenue recognition. (IFRS related to topics such as business combinations, foreign currency, and segment reporting are covered in other chapters.) The IFRS chapters also include numerical examples demonstrating major differences between IFRS and U.S. GAAP and their implications for financial statements. Separate chapters for foreign currency transactions and hedging foreign exchange risk and translation of foreign currency financial statements. The first of these chapters includes detailed examples demonstrating the accounting for foreign currency derivatives used to hedge a variety of types of foreign currency exposure. Separate chapters for international taxation and international transfer pricing, with detailed examples based on provisions in U.S. tax law. v vi Preface A chapter devoted to a discussion of the strategic accounting issues facing multinational corporations, with a focus on the role accounting plays in strategy formulation and implementation. Use of a corporate governance framework to cover external and internal auditing issues in an international context, with substantial coverage of the SarbanesOxley Act of 2002. A chapter on corporate social responsibility reporting, which is becoming increasingly more common among global enterprises. CHAPTER-BY-CHAPTER CONTENT Chapter 1 introduces the accounting issues related to international business by following the evolution of a fictional company as it grows from a domestic company to a global enterprise. This chapter provides the context into which the topics covered in the remaining chapters can be placed. Chapters 2 and 3 focus on differences in financial reporting across countries and the international convergence of accounting standards. Chapter 2 presents evidence of the diversity in financial reporting that exists around the world, explores the reasons for that diversity, and describes the problems that are created by differences in accounting practice across countries. In this chapter, we also describe and compare several major models of accounting used internationally. We discuss the potential impact that culture has on the development of national accounting systems and present a simplified model of the reasons for international differences in financial reporting. The final section of this chapter uses excerpts from recent annual reports to present additional examples of some of the differences in accounting that exist across countries. Chapter 3 focuses on the major efforts worldwide to converge financial reporting practices, with an emphasis on the activities of the International Accounting Standards Board (IASB). We explain the meaning of convergence, identify the arguments for and against convergence, and discuss the use of the IASB’s International Financial Reporting Standards (IFRS), including national efforts to converge with those standards. The almost universal recognition of IFRS as a high-quality set of global accounting standards is arguably the most important development in the world of international accounting. Chapters 4 and 5 introduce financial reporting under IFRS for a wide range of accounting issues. Chapter 4 summarizes the major differences between IFRS and U.S. GAAP. It provides detailed information on selected IFRS, concentrating on standards that relate to the recognition and measurement of assets—including inventories; property, plant, and equipment; intangible assets; and leased assets. Numerical examples demonstrate the application of IFRS, differences between IFRS and U.S. GAAP, and the implications for financial statements. This chapter also describes the requirements of IFRS in a variety of disclosure and presentation standards. Chapter 5 focuses on current liabilities, provisions, employee benefits, sharebased payment, income taxes, revenue, and financial instruments, including major differences between IFRS and U.S. GAAP. Preface vii Chapter 6 describes the accounting environment in five economically significant countries—China, Germany, Japan, Mexico, and the United Kingdom—that are representative of major clusters of accounting systems. The discussion related to each country’s accounting system is organized into four parts: background, accounting profession, accounting regulation, and accounting principles and practices. Exhibits throughout the chapter provide detailed information on differences between each country’s GAAP and IFRS, as well as reconciliations from local GAAP to U.S. GAAP. Chapters 7, 8, and 9 deal with financial reporting issues that are of particular importance to multinational corporations. Two different surveys of business executives indicate that the most important topics that should be covered in an international accounting course are related to the accounting for foreign currency.1 Because of its importance, this topic is covered in two separate chapters (Chapters 7 and 8). Chapter 9 covers three additional financial reporting topics of particular importance to multinational corporations—inflation accounting, business combinations and consolidated financial statements, and segment reporting. Emphasis is placed on understanding IFRS related to these topics. Chapter 7 begins with a description of the foreign exchange market and then demonstrates the accounting for foreign currency transactions. Much of this chapter deals with the accounting for derivatives used in foreign currency hedging activities. We first describe how foreign currency forward contracts and foreign currency options can be used to hedge foreign exchange risk. We then explain the concepts of cash flow hedges, fair value hedges, and hedge accounting. Finally, we demonstrate the accounting for forward contracts and options used as cash flow hedges and fair value hedges to hedge foreign currency assets and liabilities, foreign currency firm commitments, and forecasted foreign currency transactions. Chapter 8 focuses on the translation of foreign currency financial statements for the purpose of preparing consolidated financial statements. We begin by examining the conceptual issues related to translation, focusing on the concept of balance sheet exposure and the economic interpretability of the translation adjustment. Only after a thorough discussion of the concepts and issues do we then describe the manner in which these issues have been addressed by the IASB and by the U.S. FASB. We then illustrate application of the two methods prescribed by both standard-setters and compare the results. We discuss the hedging of balance sheet exposure and provide examples of disclosures related to translation. Chapter 9 covers three additional financial reporting issues. The section on inflation accounting begins with a conceptual discussion of asset valuation and capital maintenance through the use of a simple numerical example and then summarizes the inflation accounting methods used in different countries. The second section focuses on International Financial Reporting Standards related to business combinations and consolidations, covering issues such as 1 T. Conover, S. Salter, and J. Price, “International Accounting Education: A Comparison of Course Syllabi and CFO Preferences,” Issues in Accounting Education, Volume 9, Issue 2, Fall 1994; and T. Foroughi and B. Reed, “A Survey of the Present and Desirable International Accounting Topics in Accounting Education,” International Journal of Accounting, Volume 23, Number 1, Fall 1987, pp. 64–82. viii Preface the determination of control, the acquisition method, proportionate consolidation, and the equity method. The final section of this chapter focuses on International Financial Reporting Standard 8, Operating Segments. Chapter 10 introduces issues related to the analysis of foreign financial statements. We explore potential problems (and possible solutions to those problems) associated with using the financial statements of foreign companies for decisionmaking purposes. This chapter also provides an example of how an analyst would reformat and restate financial statements from one set of GAAP to another. Business executives rank international taxation second only to foreign currency in importance as a topic to be covered in an international accounting course.2 International taxation and tax issues related to international transfer pricing are covered in Chapters 11 and 12. Chapter 11 focuses on the taxation of foreign operation income by the homecountry government. Much of this chapter deals with foreign tax credits, the most important mechanism available to companies to reduce double taxation. This chapter provides a comprehensive example demonstrating the major issues involved in U.S. taxation of foreign operation income. We also discuss benefits of tax treaties, translation of foreign currency amounts for tax purposes, and tax incentives provided to attract foreign investment. Chapter 12 covers the topic of international transfer pricing, focusing on tax implications. We explain how discretionary transfer pricing can be used to achieve specific cost minimization objectives and how the objectives of performance evaluation and cost minimization can conflict in determining international transfer prices. We also describe government reactions to the use of discretionary transfer pricing by multinational companies, focusing on the U.S. rules governing intercompany pricing. Chapter 13 covers strategic accounting issues of particular relevance to multinational corporations. This chapter discusses multinational capital budgeting as a vital component of strategy formulation and operational budgeting as a key ingredient in strategy implementation. Chapter 13 also deals with issues that must be addressed in designing a process for evaluating the performance of foreign operations. Chapter 14 covers comparative international auditing and corporate governance. This chapter discusses both external and internal auditing issues as they relate to corporate governance in an international context. Chapter 14 also describes international diversity in external auditing and the international harmonization of auditing standards. Chapter 15 introduces the current trend toward corporate social reporting (CSR) by multinational corporations (MNCs). We describe theories often used to explain CSR practices by companies and the motivations for them to engage in CSR practices. We also examine the implications of climate change for CSR. Further, we discuss some issues associated with regulation of CSR at the international level and identify international organizations that promote CSR, such as Global Reporting Initiative (GRI). Finally, we provide examples of actual CSR practices by MNCs. 2 Ibid. Preface ix CHANGES IN THE FOURTH EDITION Chapter 1 Updated statistics provided in the section titled “The Global Economy” Updated End-of-Chapter (EOC) assignments based on annual reports and other dated material to the most current information available Chapter 2 Noted that inflation is no longer as important in explaining accounting diversity as it once was and that European accountants need to develop an expertise in both local GAAP and IFRS Chapter 3 Updated exhibits on excerpts from annual reports of various companies Added two new sections at the end of the chapter titled “Challenges to International Convergence of Financial Reporting Standards” and “New Direction to the IASB” Added three new Exercises and Problems to the EOC material Chapter 4 Noted that the discussion in the section on “Leases” is based on guidance in effect at the time of publication, and that a revised IASB-FASB exposure draft issued in 2013 was likely to substantially change and converge lease accounting at some unknown future date Chapter 5 Deleted the subsection on “Proposed Amendments to IAS 37” Rewrote the subsection on “Post-Employment Benefits” to reflect the new guidance provided in IAS 19 (Revised), which was issued in 2011 Rewrote several Exercises and Problems in the EOC material related to postemployment benefits to reflect the changes in IAS 19 (Revised) Deleted the subsection on “Termination Benefits” Removed reference to a 2009 IASB Exposure Draft from the section on “Income Taxes” In the subsection titled “IASB-FASB Revenue Recognition Project,” removed some of the specific discussion and an example based upon the 2011 IASB-FASB joint Exposure Draft, and noted that a new standard, if approved, would not become effective any earlier than 2017 Chapter 6 Updated annual report excerpts Added new material incorporating the latest developments with regard to financial reporting in China, Germany, Japan, Mexico, and the United Kingdom Added three new Questions and one new Exercise and Problem to the EOC material Chapter 7 Updated annual report excerpts and the related discussion Updated Exhibit 7.1 to provide recent exchange rates and the related discussion